cpTHE — A Synthetic & Overcollateralized Champion escrowed version of $veTHE (THENA DEX)

7 min readMar 17, 2023

What are $THE & $veTHE?

$THE is the native token of Thena Finance, a decentralised trading and liquidity marketplace native to the BNB blockchain. It rewards holders with a share of the platform’s revenues and also acts as a governance token for its weekly pool incentives gauge. THE has a decaying emissions model.

Users can stake and lock their $THE tokens on THENA for a fixed period between 2 week and 2 years, to receive a vote escrow NFT (“veTHE”), which is used to record the amount of $veTHE held by the user.

$veTHE holders receive four benefits:

a share of the trading fees from swaps using the platform’s liquidity pools;
the ability to direct $THE emissions distributed to platform liquidity providers;
weekly veTHE distribution (rebase);
the opportunity to earn bribes from external parties by voting for their incentivised liquidity pools.

$veTHE positions can be merged, split, and sold on the secondary market. $veTHE time lock period can be extended.

The amount held by a given user decreases steadily to zero as the lock period moves towards its completion. Weekly rebase is to safeguard $veTHE holders from dilution and to enable a dynamic distribution of $veTHE among participants over time, the anti-dilution level has been capped at 30%;

What is $cpTHE?

$cpTHE is a synthetic & overcollateralized version of $veTHE staked for $cpTHE to take advantage of the various benefits offered to THENA stakers.

Mint & Redeem $cpTHE

As a synthetic model of $veTHE, you can mint/redeem $veTHE to $cpTHE on the $cpTHE vault page at a 1:1 ratio.

There will be incentivised liquidity for $cpTHE-THE LP and also there will be a withdrawal reserve.

When $cpTHE value fall down below 85% of the $THE value (peg <0.85), the contract will not allow to mint more $cpTHE.

User can swap $THE to $cpTHE via smart route in the $cpTHE vault page. When $cpTHE is above peg, $THE will be locked to $veTHE and mint $cpTHE at a 1:1 ratio. When $cpTHE is below peg, $THE will be used to directly buy $cpTHE in the $cpTHE-THE liquidity pool.

You can redeem $cpTHE to $veTHE anytime with 2% redeem fee. All the redeem fee will go to Champion Treasury and become permanent voting power of Champion

The contract’s required reserved $veTHE is set at 20% of the contract’s main $veTHE

Contract’s reserve fills up in several circumstances:

when new users deposit $THE & $veTHE into $cpTHE, if below the required reserve amount at the time; or
split from the contract’s main $veTHE at 1 week after the reserved $veTHE run out.

Burning mechanism $cpTHE

Burning mechanism of $cpTHE is based on the 1% transaction fee/tax including buy/sell/add & remove liquidity

Transaction fee/tax allocation:

50% of the fee/tax will go to Champion Treasury and become permanent voting power of Champion.
50% of the fee/tax will go to BNB chain’s dead wallet, and the $THE back for those $cpTHE will be permanently locked in the contract, permanently out of circulating supply.

How overcollateralized is the $cpTHE?

From the begining of the contract, $cpTHE token is fully backed 1:1 by $veTHE.

By the time, with the burning mechanism, when user buy/sell/add & remove liquidity of $cpTHE and generate fee, half of the fee $cpTHE will be sent to dead wallet and permanently out of circulating. The back ratio of $cpTHE will be above 1:1 by $veTHE and $cpTHE in the contract will become over-collateralized.

The more volume of $cpTHE → the more fee is generated → the more backed ratio of $veTHE is → the more overcollateralized $cpTHE is.

How does $cpTHE work?

When you mint $cpTHE, the contract will immediately try to stake and lock the deposited $veTHE into main $veTHE, subject to the required reserve being maintained.

If the contract’s $veTHE reserves at the time of minting exceed the required reserve amount, the contract can stake any excess $veTHE into main $veTHE. If the $veTHE reserves are under the required reserve amount, then the deposited $veTHE will be merged to the reserve to cover the current shortfall.

Once the contract’s $veTHE is staked and locked into main $veTHE, it receives four benefits:

a share of the trading fees from swaps using the platform’s liquidity pools;
the ability to direct $THE emissions distributed to platform liquidity providers;
weekly $veTHE distribution (rebase);
the opportunity to earn bribes from external parties by voting for their incentivised liquidity pools.

The contract’s reserved $veTHE is for redeem purpose, if there is any redeem take place all the rewards will be gone.

As the $cpTHE contract perpetually re-locks its $veTHE deposits, it always strives for the maximum amount of voting power and benefits.

Earned trading fees, bribes and rebase are regularly harvested, swapped for $cpTHE & $THE and will be used to bribes $cpTHE — THE Pool on THENA.

How can I earn with my $cpTHE?

Once you’re holding $cpTHE, you can create $cpTHE-THE LP and stake into THENA dex to earn more $THE.

Where our $cpTHE contract earns trading fees, rebase and bribes by deploying its $veTHE on the protocol, those protocol revenues are swapped back to $cpTHE & $THE and use to bribes for $cpTHE Pool. This maximises the yield for holders above what they could obtain alone from the protocol.

Performance fees

Champion strives to maintain some of the lowest yield-optimizing fees, and charges standard fees on its $cpTHE vaults.

Total of 6% perfomance fee, including:

$Cham staker and/or bribes for CHAM pool on THENA: 2.5%
CF&DF Treasury: 3%
Contract’s strategist: 0.5%

How does $cpTHE keep its peg?

Lets detail 3 levels of $cpTHE peg:

$cpTHE will healthily maintain peg at Level 2 (0.85 < Peg < 1.0).

How can I get my $veTHE back?

Whilst there are $veTHE available in the reserved $veTHE, you will be able to burn your existing $cpTHE tokens (up to the amount of the reserve) to receive back an equivalent amount of $THE.

Where the reserve does not hold sufficient $veTHE to facilitate the requested withdrawal, you will only be able to withdraw up to the amount of the reserve. Users can then wait until the next deposit or a week after when contract’s reserved $veTHE is filled by splitting from contract’s main $veTHE.

Can I vote with my $cpTHE?

No. All $veTHE voting power will be used by Champion to vote in the weekly liquidity pool incentives gauge.

Votes will typically be directed either to the liquidity pools offering the most in trading fees and bribes, or to the liquidity pools which support $cpTHE token ($cpTHE-THE,…). The $cpTHE contract will harvest all trading fees, rebase and bribes from the protocol and swap those for more $cpTHE & $THE to bribes for the next epoch on THENA. Voting on THENA’s incentivised liquidity pools takes place on its web app.

Why i need $cpTHE?

If you want liquidity for your $veTHE to farming more yield and/or to be able to sell to fiat in emergency case.
If you do not have enough time to do the vote yourself
If you want to enjoy “the eighth wonder of the world” — auto-compounding

Then wrappers and optimizers are there for you.

$cpTHE is one of the solutions.

Again but why $cpTHE instead of others?

There are some reasons:

Protocols with vote-escrowed model normally see wrappers as the exist liquidity for their vote-escrowed tokens.
All the wrappers and their investors are facing some main difficulties: Losing its peg for the peg model or Drained out its reserve for the reserve model

$cpTHE is built to solve it and bring a win-win-win relationship to investors, vote-escrowed protocols and Champion

For investors: with synthetic & overcollateralized model based on burning mechanism, $cpTHE can maintain a sustainable & high peg value & APR, high ratio of $veTHE backed.
For vote-escrowed protocols: Bring constant buy pressure on dex rewards token and with the overcollateralized model, $cpTHE help to permanently remove certain quantity of $THE tokens from circulating supply.
For Champion: Treasury will generate permanent voting power, maintain a long-term revenue.

What is the risk?

$cpTHE is not the perfect solution, as it can be lost peg and user need to form liquidity in order to take advantage on farming APR.

Disclaimer

Defi is risky!

Do your own research (DYOR) before investing in any projects. Investing in defi protocols is risky and may result in monetary loss.

By using Champion Finance, you agree that the Champion Finance team is not responsible for any financial losses from investing in Champion Finance nor do we promise any valuable returns now or in the future.

Champion Finance does not operate or control the contracts on the blockchain of this protocol, these are open and permissionless and we are unable to stop anyone from using the protocol directly from the blockchain. In using these contracts you acknowledge that you understand this and are complying with the laws of your local jurisdiction.